Southern Energy (LSE:SOUC), in its fourth quarter results, highlighted its February financing that generated approximately $22 million of aggregate net proceeds, fully repaid and retired its senior credit facility, extended maturities to December 2028 and materially reduced its annual cash interest burden from 15% to 7%.
The producer of natural gas and light oil in Mississippi issued senior secured convertible debentures for $17 million, issued 30 million new common shares at CAD$0.07, raising CAD$2.1 million and received $5 million from the sale of a 6% gross overriding royalty.
Petroleum and natural gas sales were $4.6 million in Q4 2025 and $18 million for the year, adjusted funds flow from operations was $0.7 million in Q4 and $3 million for the year, and net loss was $3.7 million in Q4 and $7.5 million for the year, with net debt reduced by $4.1 million year-on-year prior to the February transaction.
Average production was 11,600 Mcfe/d (1,933 boe/d) in Q4 and 12,039 Mcfe/d (2,007 boe/d) for the year, down 14% and 21% respectively, primarily from a voluntary shut-in of ~400 boe/d from the Mechanicsburg and Greens Creek fields due to a transportation dispute.
Southern realised average Q4 prices of $3.93/Mcf for natural gas and $57.40/bbl for oil and achieved an average premium of $0.41/Mcf (approximately 12% above NYMEX HH) through 2025.
In late Q1 2026 Southern ran a 50-stage acid treatment on the GH LSC 14-06 #4 DUC using ~2,000 gallons of 7.5% HCl per stage at a total cost of approximately $700,000, and the well averaged ~500 Mcf/d over 22 days while the company evaluates an openhole multi-lateral approach as a lower-cost alternative to hydraulic fracturing.
The Adcox #3 oil well in the Magee field has produced at greater than 80 bbl/d since April 1 and repaid its capital in approximately two days, Southern expects to spud a Cotton Valley test well in Williamsburg as early as June 2026, and FERC issued an April 6 order directing settlement talks in the pipeline dispute with a hearing outcome likely in the second half of 2026 if talks fail.
An independent NSAI reserves evaluation dated December 31, reports PDP reserves of 5.8 MMboe, 1P of 13.7 MMboe and 2P of 25.3 MMboe with pre-tax NPV10 values of $29.6 million (PDP), $58 million (1P) and $103.7 million (2P).
"With materially lower leverage, no bank debt maturities, and development capital now fully funded, Southern enters 2026 positioned to convert its extensive proved developed producing and undeveloped reserve base into sustainable free cash flow," Ian Atkinson, President and Chief Executive Officer, said.
